Weekly Technical Perspective on Aussie vs Japanese Yen (AUD/JPY)

2018-08-02 16:56:00 Michael Boutros

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AUD/JPY Weekly Price Chart
AUD/JPY Trader Sentiment
Relevant AUD/JPY Data Releases
Previous Weekly Technical Perspectives

Updated weekly technicals for AUD/JPY- key support 81.58, bearish invalidation at 84.66
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In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. AUD/JPY has been trading within the confines of a broad consolidation pattern since the March lows with price now trading just above a critical weekly support confluence. Here are the key targets & invalidation levels that matter on the AUD/JPY weekly chart.

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AUD/JPY Weekly Price Chart

Notes: AUD/JPY opens August trade just above a confluence support pivot we’ve been tracking for months now at 81.58/97 – price has been unable to close below this barrier since March. Basic trendline support extending off the 2016 late-June low converges on this zone into the start of the month and further highlights its technical significance (make-or-break level).

A break below this key support confluence targets the yearly lows at 80.50 backed by the 161.8% extension off the 2017 decline at 79.45. Key weekly resistance & bearish invalidation remains steady at 84.25/66 – a close above this level would be needed to suggest a more significant low is in place with such a scenario targeting the 86-handle.

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Bottom line: AUD/JPY is trading within a contractionary range with the lower bounds now converging on up-slope support. The broader focus heading into the start of the month will be on a break of the 81.58-84.66 range. From a trading standpoint, I’ve favored near-term trades (longs) against the 82-handle - but with the monthly opening range taking shape just above this key support zone, it’s worth waiting for further guidance- watch the weekly close. I’ll publish an updated AUD/JPY scalp report once we get some more clarity on near-term price action.

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AUD/JPY Trader Sentiment

A summary of IG Client Sentiment shows traders are net-long AUD/JPY- the ratio stands at +2.03 (67% of traders are long) – bearishreading
Traders have remained net-long since July 23rd; price has remained unchanged since then
The percentage of traders net-long is now its highest since July 12th
Long positions are6.8% higher than yesterday and 6.7% lower from last week
Short positions are 28.4% lower than yesterday and 40.2% lower from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/JPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUD/JPY-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in AUD/JPY retail positioning are impacting trend- Learn more about sentiment!